A for sale sign in Carpentersville, Ill., a town with a population that is approximately 50 percent Hispanic.
A for sale sign in Carpentersville, Ill., a town with a population that is approximately 50 percent Hispanic. Stacie Freudenberg/AP

During 2017, more than 167,000 Latinos became homeowners, significantly contributing to the country's economy. However, doubts around immigration issues make their future in the real estate market uncertain.

There are more than 51 million Hispanics in the United States and their influence in the American real estate market is becoming increasingly significant. During 2017, the number of Hispanic homeowners reached 7,472,000. This figure is an increase of 167,000 homes owned since 2016. The increase largely has been driven by the purchase of new properties in areas where the Hispanic population has been growing rapidly, like Kansas, Iowa and Utah.

These findings were released earlier this year, in the 2017 State of Hispanic Homeownership Report, a project of the Hispanic Wealth Project in association with the National Association of Hispanic Real Estate Professionals.

The authors note that today, 46.2 percent of Hispanic households own their properties, returning to the levels registered in 2012 but not yet reaching the highs of 2005-2007.

Year   Hispanic Homeownership Rate Number of Hispanic-owned households Annual Change in the number of hispanic-owned households
2017 46.2% 7,472,000 +167,000
2016 46.0% 7,305,000 +213,000
2015 45.6% 7,092,000 +248,000
2014 45.4% 6,845,000 +68,000
2013 46.1% 6,777,000 +96,000
2012 46.1% 6,680,000 +352,000
2011 46.9% 6,328,000 +130,000
2010 47.5% 6,198,000 –56,000
2009 48.4% 6,253,000 –65,000
2008 49.1% 6,319,000 +15,000
2007 49.7% 6,303,000 208,000
2006 49.7% 6,095,000 +243,000
2005 49.5% 5,852,000 +404,000
2004 48.1% 5,448,000 +275,000
2003 46.7% 5,172,000 +261,000
2002 47.0% 4,912,000 +414,000
2001 47.3% 4,497,000 +256,000
2000 46.3% 4,242,000 N/A

Source: U.S. Census Bureau

According to the report, 15 percent of all homes sold in the U.S. during 2017 were bought by Hispanics. The purchasing power of this demographic group is most influential in traditionally Latino states such as Florida, Texas and California, but it is also significant in other states with Hispanic populations that have grown recently like Kansas, Iowa and Utah, as mentioned previously. In states like Wyoming, Oklahoma and Nebraska, Hispanics do not constitute a majority demographic group, but each shows a rise in the percentage of Hispanic homeowners, increasing in 2017 to 56 percent, 50.3 percent and 46.7 percent, respectively.

By 2024, Hispanics are expected to add 6,000,000 new homes owned to the national total, leading the growth of homeowners and stimulating the real estate market in the U.S. The report explains that this increase will be due to the fact that some Hispanics are leaving the states that have historically hosted them, and moving to other jurisdictions like Kansas, Iowa and Utah, lured by a job market in need of a labor force with and without college degrees, and where the housing is more affordable, enabling them to become homeowners.

For the most part, Hispanics who choose to move from California, Florida and Texas are millennials who have a higher educational level than their parents, and were born in the United States or are DACA recipients, says Sonja Díaz, director of the Latino Policy & Politics Initiative at UCLA. She explains that this internal Hispanic migration to other metropolitan areas such as Des Moines (Iowa) or McAllen (Texas), is because there is growing demand for Hispanic labor, as well as greater availability of homes priced under $300,000.

“It's about where Latinos live, but also where they can afford to enter the mortgage market and own a home, or be on the path to owning one,” Diaz said.

The report also highlights that Latinos are the fastest-growing economic force in the country, reaching a purchasing power of more than $2.13 trillion. This would make Hispanics in the U.S. the seventh largest economy in the world, if they were counted as a single country.

How does the future look?

Although the increase of Hispanic homeowners in the U.S. is auspicious, the report indicates that there are still barriers that make it difficult for new owners to enter the market. During 2017, the report identified three major problems: the shortage of affordable housing nationwide, natural disasters in areas with a high concentration of Hispanic population such as Florida and Texas, and the uncertainty generated by President Trump's immigration policies.

The shortage of affordable housing isn’t new. The United States has been experiencing a home price crisis for years: Property prices and rentals, along with the cost of living in coastal cities, have increased significantly. However, these price increases are even more noticeable in cities with a high concentration of Hispanics. Las Vegas is an example: the homeownership rate grew by 9 percent in 2017, but only 21 percent of the new homes available cost less than $300,000: In 2016 that figure was 42 percent. In San Diego, the picture did not change: most new homes cost at least $1 million; and in Houston, Tex., there was a significant increase in homeownership rate, but only in those homes priced at $300,000 or more. Similarly, states like Nevada, Washington, Idaho, Utah and California––all of which have growing Hispanic populations––were the states that saw the biggest increase in housing prices during 2017.

State Housing Price Increase 2016-2017 Hispanic population
Washington 12% 12.1%
Nevada 11% 27.8%
Idaho 10.7% 12%
Utah 10.7% 13.5%
California 8.2% 38.6%

Source: CoreLogic

“We are in a crisis, there are simply no affordable houses. Building new homes is so expensive, especially in highly regulated states like California and New York,” said Diaz. “Wages are not leveled with the prices of these houses. Many Hispanics and many Americans simply cannot afford a first home of 600,000 dollars, and that's what we're seeing in California, for example.”

In short, cities with large numbers of Hispanics do not have affordable housing that allows them to easily become owners. It is even harder given that Hispanics in the United States earn on average, $47,000 per year, while the income of non-Hispanic whites exceeds $70,000.

In addition, it is expected that the environmental disasters of 2017 will not help improve the real estate market for Hispanics. The California wildfires, together with hurricanes Harvey and Irma in Texas and Florida, directly affected the three states that currently have the largest Hispanic populations. Likewise, Hurricane María hit Puerto Rico with an unprecedented storm that, in addition to causing its own population to flee towards the mainland, also changed the supply of affordable housing on the island. Diaz argues that federal agencies do not adequately report the state of housing in Puerto Rico, and, according to her, the scenario does not look promising.

”Puerto Ricans who owned their homes on the island will have challenges and obstacles when rebuilding, and those who have already emigrated to the continent are at a disadvantage given the political and economic consequences of the disaster,” she said. ”I'm not sure if the prices of new homes that will be built in Puerto Rico will be affordable, but what I'm sure of is that housing will continue to be an issue there.”

The future of Hispanic housing will also be affected by the immigration policies coming from the White House. According to the report, this is the most sensitive and influential element affecting Hispanic homeownership growth. A total of 5,100,000 children—of which 79 percent are U.S. citizens––live in households where their parents' immigration status is mixed. That is, where 1 of 2 parents is currently undocumented or has an irregular immigration status. The risk of deportation "influences their future, socioeconomic mobility and educational patterns," according to the report.

The report explains that 31 percent of the more than 11,000,000 undocumented persons own their home and that hostile measures taken by the Trump administration could have significant consequences for the real estate industry. These policies would drastically reduce the Hispanic demand for housing, leading to a loss of billions of dollars in taxes, and decreasing a labor force that fuels the real estate market in the United States.

According to the report, this may be the most significant obstacle to Hispanics having greater and better access to housing. The ”volatility surrounding immigration reform is surely impeding the growth of Hispanic owners in the U.S., and is costing the U.S. economy billions of dollars in taxes and revenues,” the report states.

For Diaz, the question that is even more relevant: What happens to the owners who are deported from the country and what are their property rights? ”Given the way we approach our immigration system, one that is broken and dysfunctional, it is inevitable that some people will be affected by arbitrary decisions taken at the federal level,” she said.

However, the report predicts that despite the challenges and obstacles they may have to become owners, Hispanics will continue to lead growth. It affirms the importance of Hispanics to the real estate market and identifies patterns that indicate this will happen not only in the states where Hispanics have traditionally settled, but throughout the country.

This post originally appeared in Spanish on our sister site, CityLab Latino.

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